Moody's Upgrades TSMC Outlook to Positive

Moody's Outlook Upgrade for TSMC

Moody's affirmed the Aa3 issuer rating for Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and changed the outlook from stable to positive on 28 August 2026. The agency also affirmed a provisional (P)Aa3‑backed senior unsecured rating on the shelf registration of TSMC Arizona Corporation and an Aa3‑backed senior unsecured rating on notes issued by TSMC Arizona Corporation and TSMC Global Ltd., both wholly‑owned subsidiaries guaranteed by TSMC.

Moody's projects TSMC’s revenue to expand by 30‑40 % per year over the next 12‑18 months, driven primarily by strong artificial‑intelligence‑related demand and higher adoption of advanced process technologies. Advanced‑technology nodes, including 7‑nanometre and smaller, represented 76 % of revenue in the first half of 2026, up from 50 % in 2021. The rating agency forecasts the adjusted EBITDA margin to rise to roughly 75 % in the same 12‑18‑month horizon, compared with 72 % in 2025, reflecting higher capacity utilisation, productivity gains and cross‑node capacity optimisation.

Moody's expects TSMC to keep a robust net‑cash position, with adjusted debt‑to‑EBITDA remaining stable around 0.3 ×. As of 30 June 2026, the company held approximately TWD 3.6 trillion in cash and marketable securities. The agency indicated that a further upgrade would be considered if TSMC sustains its strengthened business profile, maintains leading global foundry market positions, preserves low leverage and steady free‑cash‑flow generation, and continues geographic diversification of production capacity into the United States, Japan and Germany.